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New Site Builds to Increase; Strong Tower Leasing to Continue

April 23, 2013

There was something for everyone in the latest research report released by RBC Capital Markets. New site builds are set to increase, while the good times for tower leasing activity will continue to roll in the next two years, the firm wrote. Consequently, contractors are expected to remain in short supply.

“We expect new site additions (and tower leases) to ramp noticeably at AT&T, Sprint, and Verizon in 2014, driven by capacity in fills,” Jonathan Atkin, RBC analyst, wrote in the report. “Current activity levels appear highest at AT&T and Verizon, although all four national carriers are active on 4G overlays.”

Even though tight contractor resources may knock the carriers’ build outs off schedule, RBC does not believe it will diminish the trend toward increased tower leasing activity.

“Sprint remains quite active on site overlays, although we estimate that Network Vision is running roughly four months behind schedule,” Atkin wrote.

RBC expects new site builds to increase from this year’s 2,500 target as capacity requirements take on added emphasis. AT&T is leading the way on both LTE overlays and new site additions.

While the addition of new cell sites has not been a priority at Sprint with the emphasis on site upgrading, that may change as it gains additional capital and new spectrum from its proposed mergers.

“Based on ongoing hiring trends that we have noticed in the network organization, we believe Sprint is set to commence a significant wave of new site deployments following the anticipated Softbank and Clearwire transactions,” Atkin wrote.

T-Mobile’s emphasis is currently on amendments and it is expected to complete more than 9,000 LTE overlays during 2013. RBC reported modest regional staff cuts, including areas with no MetroPCS overlap, but said they do not appear to be network related.

“The T-Mobile LTE overlay is less invasive than that of other carriers, particularly in those portions of the network that employ Ericsson gear,” Atkin wrote.

LTE activity remains high at Verizon, which has begun deployment in the AWS frequency band. Athough new site additions have remained relatively slow, RBC predicts that they will pick up.

“We have noticed search-ring activity in multiple regions that are at the highest levels in several years,” Atkin wrote. “This augurs favorably for new site additions (and tower leases) in 2014 and beyond. Amongst the major carriers, we believe Verizon is least likely to be affected by contractor shortages.”